Pennsylvania may regulate fantasy sports – Allentown Morning Call
“We look forward to working with Rep. Dunbar and legislators on an amendment that will make it clear to the 2 million fantasy players in Pennsylvania that they can do so legally,” said Jeremy Kudon, a national lobbyist for DraftKings and FanDuel. “But we strongly oppose any legislation that forces us to partner with casinos. In our view, that would be tantamount to a ban.”
A much bigger hurdle for the fantasy companies will be growing questions of whether fantasy sports money leagues are going to remain legal.
Daniel Wallach, a sports and gambling attorney in Fort Lauderdale, Fla., said there is a fine line between what makes fantasy sports legal at the federal level and what makes betting on games illegal in 49 states.
“One is based on the player-level outcome and one is based on a game-level outcome, and the line between the two is a very thin one,” he said.
Just because fantasy sports has been legal through the 2006 carve-out does not mean it will remain legal, Wallach said, adding there is a grand jury in Florida examining fantasy sports.
“It’s never been tested in court,” he said.
There may be a legal line between fantasy sports and betting on game outcomes, but there is no common-sense reason for the distinction, added Chris Grove, editor at Legal Sports Report, a website covering the spectrum of sports gambling. Ask anyone who plays fantasy sports whether they are gambling and they will say yes, Grove said.
“You know it when you see it,” he said.
The U.S. Professional and Amateur Sports Protection Act of 1992 makes sports betting illegal everywhere but in Nevada. Dunbar’s bill would deem fantasy leagues gambling in general but not specifically sports gambling, making it something Pennsylvania could regulate.
It’s possible that if Dunbar’s bill passed it could quickly be struck down, Gzesh said. Pennsylvania, he added, should be rooting for New Jersey’s efforts in the past two years to bring sports betting to the Garden State.
Ruling against New Jersey, a panel of federal judges sided with the NFL that sports betting can only be done in Nevada. However, the U.S. Third Circuit Court of Appeals has agreed to rehear the case next year.
“If New Jersey wins, then nobody has a problem. States will have a free hand,” Gzesh said. “But if the NFL wins, things could get very interesting. Then Pennsylvania’s proposed law could be open to challenge.”
A growing number of Pennsylvania legislators seem willing to take that chance.
Since January, state Rep. John Payne, R-Dauphin, chairman of the House’s Gaming Oversight Committee, has held public hearings across the state on a package of bills that would expand state-sanctioned gambling.
Internet and fantasy sports gambling are already going on, so why not let the state take its share, he argues. He said the bills could bring in $300 million to $400 million a year — though some argue that figure is inflated because it doesn’t account for the out-of-state gamblers who could not legally bet in Pennsylvania.
Still, Payne said, expanding gambling is a better way to generate revenue than Wolf’s plan to raise taxes, which the Republican-controlled Legislature has rejected. Wolf’s tax plan, coupled with the barrage of television commercials for fantasy sports companies, has more lawmakers than ever looking at fantasy sports and online gambling as revenue generators.
“I think those combinations now have made a perfect storm that maybe we should regulate Internet gaming and fantasy sports,” Payne said.
The question of whether fantasy sports should be federally regulated even made an appearance at last week’s Republican presidential debate, prompting former Florida Gov. Jeb Bush to quip that he is 7-0 in his fantasy football league. When a CNBC moderator questioned Bush, he said fantasy betting should be regulated, while New Jersey Gov. Chris Christie angrily shot back that it is a stupid idea because there are more pressing issues. ]
There will certainly be opposition to the bills in Pennsylvania. Sands Casino Resort Bethlehem owner Sheldon Adelson’s Coalition to Stop Internet Gambling is already running online and on television ads criticizing any gambling expansion in Pennsylvania and in particular Payne. The ads say children and seniors will be preyed upon by companies, and Adelson has long argued that there’s no way to stop underage and addicted gamblers from betting online.
He argues that online betting also could pull gamblers away from casinos that now pay Pennsylvania more than $1.3 billion in taxes a year. If Pennsylvania is to get into the fantasy sports gambling business, it would need to legalize online gambling. Any model that keeps people at home on their computer, rather than at the casino complex gambling, eating and shopping, is not a winning strategy, Sands executives have argued.
“We have a big investment in Pennsylvania and we want to continue to invest,” Sands Casino Resort Bethlehem President Mark Juliano said. “We’re not going to be supporting any of this expansion. It doesn’t make sense to loot the model that has proven so successful for the state.”
Adelson’s group has been making that argument since online gambling was first talked about in Pennsylvania two years ago, but momentum seems to be building for its approval and Dunbar is convinced state control is the best way to save fantasy sports.
A self-described online expert poker player, Dunbar had his poker account of thousands of dollars frozen on April 15, 2011, when the Department of Justice froze the accounts of several online poker companies deemed to be operating illegally. He said online poker was a similar situation to fantasy sports in that it was in a gray area, allowed up until the moment the Justice Department deemed it illegal.
“It took me three years to get my money back,” Dunbar said. “I’m not trying to shut fantasy players out of Pennsylvania, and I’m not trying to fill a budget void. I’m looking to protect them. This all works better if we have a system with defined rules.”
Welcome to Fantasy Island
More than 50 million Americans are in fantasy sports leagues, including millions who play for money online.
• Where they play: Online with daily fantasy sports leagues such as FanDuel, DraftKings, DraftStreet or Draftday.
• How they pay: Picking from an online menu of hundreds of leagues, players can buy into a league for as little as $1 or for more than $10,000 and can compete against one other player or more than 500,000. The amount they spend and number of players they go against determines whether they have a chance to win a few dollars or more than $1 million in a single day.